The $9 General Competitive Advantage (Complete Guide)
Dollar General is known for its dominance in the discount retailing world, experiencing continuous growth for the past 29 years, with its stores attracting shoppers looking for bargains.
But how does Dollar General handle challenges that other retail competitors struggle with? Here’s what I’ve found to be Dollar General’s key competitive advantages!
$9 General Competitive Advantage
1. Do not forget the original intention
Since opening its first store in Kentucky in 1955, Dollar General has focused on the purpose of its stores.
Its aim is to provide customers with an easy and simple shopping experience at low prices, providing the best service for less, succinctly reflected in its slogan “Save time. Save money. Every day”.
An easy shopping experience results in customers visiting its store more often, and more customers checking out and spending more money each day.
2. Convenient location
Dollar General stores were built with the premise of filling spaces left unoccupied by other retail competitors.
In this spirit, an estimated 75% of Americans live within 5 minutes of a Dollar General, giving the retailer a competitive advantage in providing shoppers with a convenient location.
Many Dollar General stores are located in rural areas, where operating costs are lower, reducing the company’s costs and thus boosting profits.
Plus, Dollar General doesn’t directly own its stores, so the company can easily move if a location doesn’t thrive.
3. Understand its target customers
Dollar General typically caters to lower-income customers, tailoring the shopping experience to key demographics.
Dollar General typically targets households with gross annual incomes below $40,000.
Often, these shoppers live in rural areas often referred to as “food deserts,” meaning they live away from other, larger grocery stores.
In this way, Dollar General has built a loyal customer base who can find weekly essentials at extremely low prices at its stores (located nearby).
4. Simple shopping experience
Dollar General’s stores are designed to be easy for customers to navigate, and the average Dollar General shopping trip takes only 10 minutes.
Because of this, customers feel comfortable visiting Dollar General repeatedly and ultimately buying because of the deals.
One of the ways Dollar General is doing this is by launching a scan-to-pay app called DG GO!. More than 250 stores offer the service to help speed up checkout.
Dollar General DG GO! The system has useful features such as running totals that let shoppers know how much they are spending, adding to their convenience.
5. There are many best-selling varieties
Dollar General stocks mostly proven favorites like snacks, toiletries and other essentials, but it’s also constantly expanding into more exotic items to attract new shoppers to its stores.
That means it has a high product turnover rate, meaning its shelves often empty quickly, boosting its overall revenue and profits.
In addition, Dollar General keeps limited quantities of fresh or perishable food items available for purchase in its stores, reducing waste and keeping costs low.
But Dollar General plans to expand that reach, as it could help snatch more customers away from competitors for essential shopping trips.
6. Competitive price
As the name suggests, Dollar General promotes its stores by offering customers competitive prices on quality merchandise.
Many of the products sold at Dollar General retail for around 20-40% less than the average price at a competitor’s grocery or drug store.
This competitive pricing has led to a culture of customers ‘hunting’ for a bargain at Dollar General, and are very satisfied when they find a good deal.
At the same time, Dollar General has also started rolling out higher-quality items like kitchenware to attract wealthier shoppers while encouraging regular shoppers to splurge.
7. Sustained growth strategy
Currently, Dollar General operates about 16,000 stores in more than 40 US states, 45% of which are located in the southern states to serve its target customers.
This constant effort to expand and increase the number of stores has given Dollar General a significant portion of the market in terms of its target demographic.
Because its stores are relatively small (about 1/10 the size of a Wal-Mart store), Dollar General can open a new store for as little as $250,000, much less than the equivalent cost of its competitors.
In this way, it was able to expand and build new stores much faster than its competitors, and ultimately attract more customers.
8. Low operating cost
Another way Dollar General maintains its competitive edge is by continuously improving operational efficiency and keeping operating costs to a minimum, thereby increasing profits.
It does this in a number of ways, such as by cutting costs and reducing waste in its supply chain and preventing shoplifting.
For example, Dollar General expanded its private delivery fleet from 80 to 200 vehicles in 2018, reducing delivery times and thereby saving costs.
In addition, Dollar General offers more than 40 private-label products and has a large degree of control over the production of these products, thereby optimizing processes and reducing operating costs.
9. The benefits of buying in bulk
Dollar General stock has reliable and popular brands that bring in steady sales, so it’s able to buy large quantities of the same product and benefit from bulk-buying discounts.
To put that in perspective, while competitors such as Walmart stock over 60,000 unique items, Dollar General only selects a more manageable 10,000-12,000.
Among other things, buying in bulk helps Dollar General feel more confident with its suppliers and get better prices compared to its competitors.
To learn more, you can check out our related posts on Dollar General stats, why Dollar General is so cheap, and whether Dollar General is a franchise.
in conclusion
By focusing on and appealing to its target demographic, Dollar General was able to provide a competitive and straightforward shopping experience. Apart from this, it benefits from low operating costs and a sustainable strategy of rapid growth due to its small store size.
Combined, these competitive advantages ultimately allow it to maintain a loyal customer base and continue to achieve greater success.
